I think it's a restructure. Here's the answer explanation:
Amount owed to unsecured creditors $1,200,000
Less cash paid $400,000
Common stock issued at fair value*
(80,000 shares x $1.25) 100,000 500,000
Gain on restructuring $ 700,000
=========
* Common stock would be increased by $80,000
(80,000 sh x $1 par).
Additional Paid-in Capital would be increased by $20,000
(80,000 sh x ($1.25 – $1)).
The net increase in Hale Corp.'s stockholders' equity is $800,000, the sum of the $700,000 gain on restructuring plus the $100,000 increase in stockholders' equity resulting from issuance of the additional shares.
FAR- 85 I'm DONE!
BEC- 75
REG- 60,60,75
AUD- 74,74,83
CPAExcel used for BEC, AUD, REG
Exam Matrix used for FAR plus NINJA Blitz, cpareviewforfree and a little CPAExcel
.